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Firm that built MTA cars wins $5 million jury verdict in case involving late delivery of metro rail cars.

it wasn't their fault that 30 metro rail cars were delivered late to the Los Angeles County Metropolitan Transportation Authority (MTA).

The jury not only agreed, but this week awarded Breda Costruzioni Ferroviarie, S.P.A., of Pistoia, Italy, $5 million in a judgment of fraud against the company that manufactured the propulsion systems for the cars.

"Although they are delighted with the award itself, more was at stake than just the money," said Mat Moore, a partner at Howard, Rice Nemerovski, Canady, Falk & Rabkin, the San Francisco and Orange County law firm which represented Breda. "Our client has built mass transit systems for Washington, D.C., Cleveland, Seattle and San Francisco, and never before failed to deliver as promised. Their reputation was at stake in this case -- and the jury vindicated them."

Breda is supplying 72 metro rail cars to the MTA for the Red Line, which serves downtown Los Angeles. The first thirty cars were delivered several months late -- and the MTA was hopping mad -- resulting in an assessment of liquidated damages by the MTA, the first time this has ever happened to Breda.

But it wasn't Breda's fault. The jury found that ABB Traction Inc., of Elmira, N.Y., the firm that subcontracted to manufacture the propulsion systems for the cars, fraudulently induced Breda to award it the Red Line job, then delivered the propulsion systems two years late. Even though they were able to whittle the delay down to a few months, the cars still arrived at the MTA late. To top it off, ABB, a subsidiary of Asea Brown Boveri, tried to collect the full $3 million it said it was owed for the contract. Instead, the jury gave Breda $5 million for fraud and breach of contract.

"A jury award of this magnitude in a case like this is somewhat unprecedented, but completely justified by the magnitude of ABB's transgressions," said Moore. "Considering that it was my client's first experience with the U.S. judicial system, they are grateful that the jury was as outraged as they by ABB's conduct on this public project."

In addition to Moore, Matt Jacobs and Anna Marie Armstrong of Howard, Rice also represented Breda. ABB was represented by Bruce Gridley and Alan Gradwohl of Federman, Gridley, Gradwohl & Flaherty.

CONTACT: Howard, Rice, Nemerovski, Canady, Falk & Rabkin

Mat Moore, 415/434-1600


The Montgomery Group

Hatti Hamlin, 415/391-3040
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Publication:Business Wire
Date:Oct 19, 1995
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